NEW YORK, June 27 (Reuters) - Deutsche Bank (DBKGn.DE) has
resigned as the lead underwriter for a proposed initial public
offering by iWatt Inc, which makes chips used in Apple (AAPL.O)
products, following a dispute over valuation wi t h the company's
chief executive, two sources familiar with the matter said.

iWatt CEO Ron Edgerton confirmed the company has decided to
"part ways" with Deutsche Bank but declined to provide reasons
for the breakup in an interview with Reuters on Wednesday.

"We had a conversation where we said that we will be
mutually respectful of each other's confidentiality and we would
part ways in a professional manner," Edgerton said. "Our intent
is to move forward and we’re looking forward to moving ahead."

It is rare for the lead underwriter to drop out of a deal in
the run-up to a stock offering. iWatt had initially expected to
launch the deal as early as July, but the development -- along
with a moribund market for IPOs in general -- has put the timing
of the Campbell, California-based company’s offering in
question, according to the sources.

The sources could not be identified because the discussions
were private.

iWatt Inc filed with U.S. regulators earlier this month to
raise up to $75 million in a public stock offering. In that June
4 filing, the company had listed Deutsche Bank as the "lead
left," or main lead, underwriter and Barclays (BARC.L) as the
other lead underwriter. Canaccord Genuity, Baird, and Needham &
Company were also listed as underwriters.

iWatt's chief executive did not agree with the valuation of
the company proposed by the underwriters and sent an email to
the banks that concerned at least some of them, the sources
said. Further details of the communication between the company
and its underwriters were not available.

Deutsche Bank, Barclays, Canaccord Genuity and Needham &
Company declined to comment. Baird could not be reached for
comment.

Edgerton became iWatt’s CEO in March 2008. He was previously
the president and CEO of Austin, Texas-based audio chip maker
SigmaTel. He resigned from SigmaTel in 2007 amid sluggish sales
growth for the company’s chips.

iWatt intends to list on the Nasdaq under the symbol "IWAT,"
it said in a preliminary prospectus that did not reveal how many
shares the company or stockholders plan to sell or their
expected price.

The amount of money a company says it plans to raise in its
first IPO filings is used to calculate registration fees. The
final size of the IPO could be different. iWatt has shipped more
than 1 billion power management integrated circuits (IC) since
2007, including more than 400 million ICs in 2011, according to
the regulatory filing.

Its chips are also used by Cree Inc (CREE.O), Konka Group Co
000016.SZ and Royal Philips Electronics.

The company, which qualifies as an 'emerging growth company'
under the JOBS Act, is backed by Vantage Point Capital Partners,
Sigma Partners and Horizon Partners among others.

The JOBS Act is intended to make it easier for young
companies - with less than $1 billion in annual revenue -- to
raise money, by reducing regulatory barriers and exempting them
from some accounting standards for up to five years.

The U.S. IPO window has begun to open up again, with four
offerings this week, including technology company ServiceNow.
But the market has chilled considerably in the aftermath of
Facebook Inc’s (FB.O) botched public debut in May as well as
ongoing concerns about the European debt crisis.

(Reporting by Olivia Oran and Soyoung Kim in New York, Editing
by Paritosh Bansal, Martin Howell and Bernard Orr)

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